General Electric filed a request with the Financial Stability Oversight Council (FSOC) Thursday, asking to be relieved of its “too big to fail” label after it substantially downsized its finance division.

GE first took steps towards renouncing the shorthand for Strategically Important Financial Institution (SIFI) and the strict government oversight that comes along with the term last April, when it announced that it would begin to transform its finance division, GE Capital.

According to The Wall Street Journal, GE Capital was worth about $500 billion at the time of GE’s announcement last April. Currently, the company has closed deals to sell off $138 billion of its lending businesses. It has signed deals to sell off about $30 billion more.

GE Capital chairman and CEO Keith Sherin stated that the company had ended its leveraged and consumer lending programs, as well as most of its middle-market lending, and sold off most of its real estate assets.

Overall, GE Capital has dispensed with 52 percent of its total assets. It will complete the sale of its second, and final, bank charter by the end of April.

“Our submission details the complete transformation of GE Capital,” said Mr. Sherin in a company press release. “Our plan to change our business model, shrink the Company and reduce our risk profile has been successful.”

GE was first designated as an SIFI in 2013, several years after the 2007-2008 financial downturn heightened concerns about businesses so large (too big to fail) that their failure could threaten health of the entire financial market.

“We believe GE Capital no longer meets the criteria to be designated as a SIFI,” said Mr. Sherin, “and we look forward to working cooperatively and constructively with the FSOC through the rescission process.”

Some say that if GE is allowed to drop the “too big to fail” designation, it will be harder to regulate similar companies in the future.

A labeling change could be “really potentially damaging to the framework Dodd Frank set up to oversee nonfinancial institutions,” Marcus Stanley, the policy director of Americans for Financial reform, told The Washington Post.

On the other hand, some say that GE Capital’s recent downsizing moves mean that it has naturally slipped out of the “too big to fail” bracket.

“I think GE, given that it has shed large numbers of its loan business,” says Dr. Jay Zagorsky of Ohio State University in a phone interview with The Christian Science Monitor, “should be allowed to drop the 'too big to fail' designation, in that it no longer makes economic sense.”

Dr. Zagorsky, who says that he and his wife own a small amount of GE stock, also said that of all the companies that received the “too big to fail” designation, GE Capital had actually done the best job of shedding loanable assets.

It is natural, Zagorsky says, for large equipment manufacturing companies, such as GE, to provide company loans for the purchase of their more unusual products, such as locomotives, because the company knows the value of its own product. At the time that it received the “too big to fail” label, GE had gone far above and beyond that initial lending aim, granting loans for cars and houses. Now, Zagorsky says, GE lending has largely been restricted to its more natural, original business purposes.

Whether or not GE dropping the label could make big corporations harder to regulate is harder to say.

Zagorsky says that government regulation follows a cycle after a crisis.

“I think in general, what happens in society is that a crisis causes over regulation,” says Zagorsky, “followed by a gradual removal of regulations as conditions improve, which eventually leads to under regulation, which leads to another crisis.”

GE is not alone in its quest to shed the strictly regulated “too big to fail” designation. Just this Wednesday, MetLife (designated “too big to fail” alongside GE several years ago) won a federal case that challenged that label.

MetLife was one of four companies (alongside AIG, GE, and Prudential) to receive the initial label, and was the first to lose it, after it argued that it had been improperly labeled from the start.

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After MetLife’s victory, AIG was asked if it, too, would look into dropping the label.

“It certainly opens that opportunity,” said AIG CEO Peter Hancock, “but I think it’s something we want to reserve judgment to see how the rules ultimately get written and how they get interpreted by the regulators.”

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